The U.K. government will provide 810 million pounds ($1.1 billion) for new clean-energy technologies, an effort that sharpens the Treasury’s focus on ways to reduce pollution and ensure electricity supply.
The Treasury allocated 730 million pounds by 2021 for as much as 4 GW of new offshore wind farms and other less-established renewable energy technologies, according to its annual budget statement Wednesday. It also set aside 50 million pounds for research in energy storage devices and another 30 million pounds for a competition to build the some of the world’s first small-scale nuclear reactors.
The decisions set out by Chancellor of the Exchequer George Osborne in his annual budget statement are meant to keep alive the government’s green commitments, which have been undermined by moves to slash support for renewables. Concerned that wind farms are blighting the landscape and solar installations boomed faster than forecast, the government has reined in subsidies for those technologies and emphasized commitments for offshore wind and nuclear plants.
“Offshore wind will be cheaper than new nuclear power and competing with gas by 2025, making it even better value for money,” said Maf Smith, deputy chief executive of RenewableUK, an industry group that estimates the decision will deliver 3.5 GW of offshore wind capacity from 2021 to 2025.
Osborne on Wednesday confirmed plans Energy Secretary Amber Rudd announced in November to hold three auctions by 2020 for new offshore wind-power capacity. That decision required the industry to reduce the costs of power it generates to 100 pounds a megawatt-hour.
The first 290-million pound auction, which Rudd has said is scheduled for this year, will cap the price for offshore wind farms at 105 pounds per megawatt hour in 2011 and 2012 prices. Future auctions will tighten the cap to 85 pounds per megawatt hour for offshore wind farms due to be commissioned in 2026, the Treasury said.
Developers including Vattenfall AB are gearing up to take advantage of the incentives. The Swedish utility this week started planning two 1.8 GW offshore wind farms near Norfolk, which are due to be commissioned in the 2020s.
The money for offshore wind is not enough, Matthew Spencer, director of the Green Alliance research group, said in an e-mail.
“Funding less than 1 GW a year of offshore wind in the 2020s, with nothing for mature renewables, will leave a big gap in power generation, however fast we pursue nuclear and gas,” he said. “This is another example of the government being strong on climate targets, and weak on driving the necessary investment.”
The 50 million pounds for research on energy storage will help companies work on stabilizing the national electric grid, which is having to cope with increasingly intermittent flows of renewable energy from wind and solar plants. The Department of Energy and Climate Change has also said it will work with energy regulator Ofgem to remove red tape holding back investment in energy storage.
“The cleanest energy is the one we do not use,” said Rodney Turtle, director of public policy and government affairs at power technology supplier Schneider Electric SE. “Support for technology development and trials of energy storage is an important investment in our critical national infrastructure.”
Osborne invited companies to enter a 30 million pound competition that aims to build one of the world’s first small modular nuclear reactors in 2020s. The Treasury said in November it would plow 250 million pounds over the next five years into the research and development project.
Fluor Corp.’s NuScale unit is seeking to be a pioneer in the market and plans to submit its 50-MW reactor design for approval to U.S. authorities toward the end of 2016.
© 2016 Bloomberg
Lead image: Wind turbine off Norfolk coast. Credit: Shutterstock.